David Dole, Country Director, Asian Development Bank.
Ten years ago, the Asian Development Bank (ADB) opened its offices in Armenia. What began with small projects has blossomed into large infrastructure projects, including the North-South Road Corridor. In the last decade, ADB has invested over one billion dollars in Armenia, primarily in the public sector. David Dole, ADB’s Country Director spoke with CivilNet about some of the successes and challenges over the past ten years of operations in Armenia.
Maria Titizian – The Asian Development Bank just marked its 10th anniversary of service and operations in Armenia. In those 10 years, ADB has invested over a billion dollars. What have been the successes and the failures in that 10 year journey?
David Dole – Well, let’s start with the successes. I first have to give credit to all of the partners that we work with. We work directly with the government on financing and implementing the government’s projects, with the private sector, with civil society and with other international organizations. So, anything the ADB has accomplished in Armenia, the credit has to be shared with all of our partners.
Now, with that acknowledgment, I would highlight a few successes of ADB in Armenia. I think probably the biggest one is getting started with the North-South road. The idea for the North-South road came before ADB was here, I think even before Armenia joined ADB, the idea had been there, but the government came to ADB with the idea, ADB helped develop the concept, we developed first projects, and financed those and got the whole project started.
Now we have other organizations working on North-South road, we have the European Investment Bank, which is financing of the northern parts of the road, and we have the Eurasian Development Bank, financing the southern parts of the road. And we’re working on the finishing the whole thing. Of course it’s not finished yet, but I think getting started on that big important project was a major accomplishment for the government and ADB together.
I think another accomplishment recently would be our new seismic safety improvement program; it hasn’t actually started officially yet, ADB approved the funding in September, and now the government’s going through its processes to formally approve the financing. We think that’ll be finished soon. And we’ll start with the rehabilitation of about 50 schools in Armenia. Now there are more than a 1000 schools in Armenia, eventually we’ll get through all of those that need to be rehabilitated. Of course it’s gonna take a while, but it’s been a really important accomplishment to get to this point where we are now, because looking back 4-5 years ago, when I first started in Armenia, this was something that was always an important issue but wasn’t yet on the agenda high enough to actually start financing.
And then I think another accomplishment would be, that is still yet to be achieved, is solid waste. We have been working with the government for the past 3-4 years on developing environmentally sound solid waste management in Armenia. We’re still not there yet. We’re developing new projects, and I hope those will be ready to be financed and implemented in the next year.
MT – OK. And the challenges… Let’s not call them failures, let’s call them challenges.
DD – Well, the challenges of course were getting started. Armenia joined ADB in 2005, and then it was 2007 when we started our first project here. So we come into the country, we don’t know anybody, we don’t really know anything about the country, so we started slow, we built our relationships, we found good projects to start with that were relatively easy, we started with rehabilitation projects, particularly, rehabilitation of water supply systems and roads, just to get off on a good start. And those projects have indeed been very successful. So, that challenge of getting started was the first one we faced. And recently, of course we faced challenges in getting started with the North-South road project…
MT – Sure, excuse me for interrupting, but because it’s still riddled with problems. Just as people who use the road, we’ve seen that there hasn’t been much work being done on the road itself; there have been constant delays with the road. Wasn’t the Armenian government responsible for implementing the actual project, so when they’re late, do they pay fines or dues?
DD – Well, I wouldn’t say it’s riddled with problems, there have been many issues, technical issues to overcome, almost all of those issues have been overcome now…
MT – Are they overcome now?
DD – Almost all of them.
MT – Because there were problems with some foreign contractors, right? With service delivery, quality…
DD – Yes.
MT – So those have been resolved?
DD – Most all of them. We’ve been working with the government on those, we have some technical assistance with the government providing some experts on construction practices, and testing…
MT– Was it perhaps too ambitious for Armenia’s government to implement? Were we not ready to implement that huge project of connecting the north with the south?
DD – It was definitely ambitious. I wouldn’t say too ambitious, because, look, now we’re making good progress. One of the big challenges has been land acquisition and resettlement, because the way the road is being constructed, at least now, the section to Gyumri, there will be a new second carriageway, where there was never any road before, so we have to acquire..
MT – So, it’s a question of eminent domain now?
DD – Yes, in ADB we call that involuntary resettlement, because it’s the government acquiring the land, but in the end we ideally hope it will be voluntary, that the landowners are given a fair price, and they agreed to sell their property. But to go through that process at the highest international standards which has definitely happened, is a lot of work, there’s a lot of analysis that goes into that to estimate fair economic values for everyone, there’s a lot of consultation that’s involved, in seeing what the landowner’s concerns are, how are they using their property and so on, so that they can… they made a fair…
MT – Yes, because if they make a living off the property, it’s valued at a different rate, or if they’re just living on the property, it’s valued differently, I’m assuming, right?
DD – Well, everything is valued at the market rate to make sure they get the fair market value for their property. When markets are a little bit thin, it’s harder to get information like that, so we have to estimate the economic value sometimes, for example, what would be the profits coming from an orchard or something.
MT – Yes, that would be a huge challenge in any country, never mind in Armenia.
DD – It’s always a challenge in every country, but this was I think the first large scale land acquisition in Armenia, so there were lots of technical challenges to overcome, challenges in titles, things like this, the records, everything had to be learnt, from start, to go through this whole process, but now the process is going very well – the land acquisition process, and we think that it can continue to progress very smoothly, but of course, with still the same hard work and challenges still to come in the near future.
MT – Well, any kind of large infrastructure project has a lot of challenges. Do you monitor how the government is implementing them? Do you have a system in place to monitor, evaluate it, is there an ongoing consultation with ADB and the government on how to improve the implementation process? Do you get involved in that?
DD – Yes, we do get involved in that. First, for example, one kind of contract that we require even the government to use, involves the government hiring an independent supervisor to check the works and approve those works technically before the contractor can be paid. So that’s one part of the oversight, the supervision of the implementation of the project, that’s really from a technical perspective, an engineering perspective. We also work with the government, with our specialists coming from ADB headquarters, 2-3 times a year or more if needed, to check on the progress, to report to ADB headquarters, flagging issues and as needed, mobilize more resources, like we have done this year with more technical assistance for the government to handle these kind of technical problems.
MT – And the response by the government has been positive? They’re willing to sit down and listen?
DD – Of course.
MT – And have you seen improvement?
DD – Yes, yes, actually I would say it’s more that the government’s asking us for help…
MT – Right, so they’re realizing what the shortcomings are and then asking for assistance?
DD – They understand the challenges that they face on a daily basis working on the project, and they often ask us for help, and we help as much as we can.
MT – I was looking at some of the numbers; ADB has invested over a billion dollars in Armenia, 90 percent of which, approximately, has gone to the public sector, including big projects in water supply, good governance or creating a good business environment, the North-South corridor. And about a 133 million to the private sector. Do you see this ratio changing, or is the ADB’s mission to assist the public sector as opposed to the private sector in Armenia?
DD – We would like that ratio to change, we would like to do more private sector financing in Armenia, as in all countries. Primarily ADB’s work in all countries has been working financing public sector projects, but we do want to do more private sector financing in Armenia as everywhere. You know, the challenge is always to find those good projects and also to have the capacity from ADB’s side also to finance that, whether it’s our own, just having enough people available to come from ADB headquarters to do the work, to put together ideas.
MT – And you also work with civil society as well. So would you be providing loans, or financing grants for civil society organizations, or is it a little bit different?
DD – It’s a little bit different. We do have some small grants that we have provided to civil society, for example, Armenian Young Women’s Association, we helped them a few years ago financing some training for business women. But we more frequently work with civil society just on kind of issues, topics, for example we are working now with the IDEA foundation and Gyumri project HOPE to organize what we call the Gyumri Development Forum. Next month we have a course in Gyumri, where we hope to kind of create a new movement to spur the further development of Gyumri.
MT – Sure. Being Armenia’s second largest city and yet very underdeveloped in comparison to its potential, right?
DD – Yes, we can go there and we can see that it still has some very beautiful architecture, geographically it’s very strategically positioned, it has a lot of potential, but you can also see that it has suffered over the past 25 or more years.
MT – Yes, especially because of the earthquake.
DD – Starting with the earthquake, and then with the reforms in the end of the Soviet Union, and the difficulty that it has faced with building a new industry there.
MT – When large corporations, organizations like the ADB come to Armenia, or countries similar to Armenia, whether that’s in the post-soviet space or developing democracies, and you invest a lot of time, money and effort. Do you expect or do you place obligations, again, I’m not only speaking about Armenia, before the governments that you are working with that they have to comply to certain standards or regulations or types of governance and accountability and transparency. Or is that not part of the mandate of ADB?
DD – Well, yes, it is. For example, let’s take the North-South road again. When the government takes a loan from ADB, it agrees to follow ADB’s guidelines for public procurement, for environmental protection, for land acquisition and resettlement. Those are all standard conditions in our loan agreements and we work very closely with the government and very hard on our side to make sure that all of those requirements are met. In other programs we can have more program-specific conditions. For example, we have recently completed a program, which we called the Infrastructure Sustainability Support Program, which was a 2-year program of reforms in the government to improve the sustainability and the maintenance of roads and water supply systems. And we worked with the government to develop those reforms and then to implement them over the past two years.
MT – After 10 years of operation and service in Armenia, does the ADB still view its cooperation with the country as a viable thing, and will you be moving forward for the next foreseeable future?
DD – Yes, we have after 10 years a very strong relationship with the government, and we’re building our relationships with the private sector and civil society. We see a lot more important things to do here in Armenia and we’ll be glad to be working here for the next 10 years and beyond.
MT – We’ll be glad to have you continue doing that kind of work. David Dole, thank you so much, thank you for all the work that ADB is doing, and hopefully we will see real fundamental change in projects and the way the government operates and the way they implement programs in the country.
DD – I agree, and thank you again for the invitation, it was my pleasure.
